Confidential documents obtained by RTÉ's This Week reveal that local authorities indicated their co-operation with the establishment of the State's new public utility, Irish Water, may be linked to assurances over jobs, pensions and the duration of service-level agreements.
It follows revelations in the Dáil last week that one-third of all jobs at the new semi-State were awarded to former local authority staff.
The unpublished 40-page document, dated 5 December 2012, was prepared by the Irish Water steering group.
The purpose of the document was to update Bord Gáis on the progress being made with the establishment of the new semi-State.
According to the document, the local authorities had "strongly hinted" that their co-operation with the essential due diligence process in relation to the inventory of the State's water assets, then under council control, depended on resolving a number of issues.
The steering group told Bord Gáis that Irish Water was already working towards an "aggressive timeline"; that the process could not be agreed with the councils, and that progress was "very slow".
Irish Water's discussions with the local authorities were being conducted through a group called the Transition Office (TO) which was set up under the control of the City and County Managers' Association. (CCMA).
The document states that: "The Transition Office strongly hinted that the provision of information for due diligence may be linked to the resolution of a range of issues the CCMA have."
It goes on to say that these issues included the transfer of substantial numbers of local authority staff into Irish Water.
Other issues which the local authorities wanted resolved included the option of transferring all pension liabilities from existing local authority staff who move to Irish Water to their new employer.
It included the question of councils being compensated for losing the value of the assets.
And it also included clarity on the duration of service-level agreements between Irish Water and the local authorities.
Responding to the contents of the document, Irish Water told RTÉ's This Week that "in order to ensure continuity of service and limit 'additionality' in the industry, certain roles had restrictions placed on them and were only recruited from local authorities, Bord Gáis and the Department of Environment".
Figures released to Labour's Kevin Humphries last week under a parliamentary question show that out of the 310 staff at Irish Water, 107 were awarded to former council staff. By comparison, five were awarded to former departmental staff.
"Regarding pensions, under existing pensions legislation, local authority staff who take up duty in commercial semi-states, can have their pension entitlements and liability for future service transferred to the new employer.
"In relation to the liability for past service of staff who take up duty in Irish Water, this is being dealt with by the State in accordance with the Water Services Act," an Irish Water spokesperson said.
Also responding to the contents of the document, a spokesman for Environment Minister Phil Hogan said that references to the co-operation by local authorities was related to a bid to "secure union agreement to co-operation with the fact-finding/due diligence".
"The Local Authority Water Services Transition Office worked closely with Irish Water on the conduct of the due diligence exercise."
However, the document states that the issues which required resolution had come from the CCMA, which represents senior city and county council management, and not the unions.
The CCMA and the Transition Office did not respond to a query on the issue of Irish Water recruitment.